Peptides containing phosphonate based, non-hydrolyzable phosphotyrosyl (pTyr) mimetics and also arylphosphonate-containing small molecules have been previously shown to be competitive inhibitors of protein-tyrosine phosphatases (PTPases). These agents suffer from low cellular penetration which is partially attributable to ionization of the phosphonate group at physiological pH. We have developed the non-phosphorous containing pTyr mimetic, L-O-malonyltyrosine (L-OMT) and it's fluoro-derivative (FOMT) and incorporated them into a hexamer peptide Ac-D-A-D-E-X-L-amide (X = L-OMT or FOMT). Both peptide derivatives potently inhibited dephosphorylation of insulin receptor by a recombinant PTPase, PTP-1B. FOMT-containing peptide showed 10-fold higher activity compared to its L-OMT analog. Prodrug protection of L-OMT or FOMT moieties as carboxylic acid diester could potentially increase cellular penetration, thereby making them valuable reagents for cellular studies.